Elevare Pay Easy Pty Ltd v Cathy Jayne Again Pty Ltd - [2021] QSC 303

SUPREME COURT OF QUEENSLAND

CITATION:

Elevare Pay Easy Pty Ltd v Cathy Jayne Again Pty Ltd & Anor [2021] QSC 303

PARTIES:

ELEVARE PAY EASY PTY LTD ACN 634 728 591

(applicant)

v

CATHY JAYNE AGAIN PTY LTD ACN 642 764 903

(first respondent)

AND

CATHY JAYNE HOGBEN

(second respondent)

FILE NO/S:

BS 11451 of 2021

BS 12728 of 2021

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

18 November 2021

DELIVERED AT:

Brisbane

HEARING DATE:

16 November 2021

JUDGE:

Brown J

ORDER:

The order of the Court is that:

In respect of proceedings BS 11451/21:

1.   The applicant have leave to file the Amended Originating Application dated 15 November 2021.

2.   The first and second respondents be restrained from making an application to wind up the applicant based on non-compliance with the Creditors Statutory Demand dated 9 September 2021 (“Demand”).

3.   The respondents pay the applicant’s costs on a standard basis.

4. The Demand does not substantially comply with the essential requirements of section 459E of the Corporations Act 2001 and Form 509H under the Corporations Regulations and non compliance with it is insufficient to support an application to wind up the applicant.

In respect of proceedings BS 12728/21:

5.   The creditors statutory demand for payment of a debt dated 13 October 2021 is set aside.

6.   The first and second respondents pay the applicants costs on the indemnity basis.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SUBSTANTIAL INJUSTICE – where the applicant and first respondent entered into a loan agreement – where the applicant treated the loan agreement as being terminated – where the respondents issued the applicant with two statutory demands – where the applicant seeks to set aside the statutory demands

Corporations Act 2001 (Cth) ss 459G, 459H, 459E, 459J, 459S
Corporations Regulations 2001 (Cth)
Service and Execution of Process Act 1992 (Cth) s 16

David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265, cited
Elan Copra Trading Pty Ltd v JT International Pty Ltd (2005) 226 ALR 349, considered
Elliott Harvey Securities Ltd v Raynel & Anor [2015] QSC 212, cited
First Line Distribution Pty Ltd v Paul Whiley (1995) 18 ASCR 185, cited
Re Beralt Pty Ltd [2001] 1 Qd R 232, considered
Re International Materials v Technologies Pty Ltd (1993) 47 FCR 226, cited
Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235, cited
SP Hay Pty Ltd v David Gray & Company Pty Ltd (2019) 133 ACSR 504, considered
Sustainable Organics (Wooshaway) Pty Ltd v Ranger and Loaders Pty Ltd [2011] QSC 45, considered

COUNSEL:

L Copley for the applicant

SOLICITORS:

McInnes Wilson Lawyers for the applicant

Elevare Pay Easy…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] QSC 303
Decision Date: 18 November 2021

CaseChat Overview and Summary

The case of Elevare Pay Easy Pty Ltd v Cathy Jayne Again Pty Ltd involved a dispute over statutory demands issued by Cathy Jayne Again Pty Ltd and Judy Ann Staker (collectively referred to as the respondents) to Elevare Pay Easy Pty Ltd (the applicant), seeking payment of debts. The matter was heard in the Queensland Supreme Court. The primary issue before the court was whether the statutory demands were valid and, if not, whether they should be set aside. The court had to consider whether there was a genuine dispute as to the existence of the debts claimed and whether the statutory demands were defective in some manner.

The applicant argued that there was no debt owed to the respondents and that the statutory demands were invalid. The applicant claimed that the preconditions required to trigger the obligation to advance funds under a loan agreement were not met, and therefore, no debt was incurred. The court examined the terms of the loan agreement and the statutory demands, finding that there was a genuine dispute as to whether the preconditions were satisfied and that the statutory demand did not pertain to a debt. The court also found that the statutory demands were defective in several respects, including the lack of a specific address for service within the State. Despite these defects, the court held that the statutory demands were not so defective as to warrant setting them aside entirely. However, the court found that the circumstances warranted ordering that costs be paid on an indemnity basis for the second statutory demand due to the respondents' refusal to withdraw it despite being informed of its deficiencies.

In conclusion, the court granted the applicant's application to set aside the second statutory demand and ordered the respondents to pay the applicant's costs on an indemnity basis for that demand. The court also restrained the respondents from making an application to wind up the applicant based on non-compliance with the first statutory demand, ordering that the respondents pay the applicant’s costs on a standard basis for the first demand. The court allowed the applicant leave to file the Amended Originating Application and declared that the first statutory demand did not substantially comply with the essential requirements of the Corporations Act and the Corporations Regulations and that non-compliance with it was insufficient to support an application to wind up the applicant.

Orders

Orders of the court

The order of the Court is that:

In respect of proceedings BS 11451/21:

1. The applicant have leave to file the Amended Originating Application dated 15 November 2021.

2. The first and second respondents be restrained from making an application to wind up the applicant based on non-compliance with the Creditors Statutory Demand dated 9 September 2021 (“Demand”).

3. The respondents pay the applicant’s costs on a standard basis.

4. The Demand does not substantially comply with the essential requirements of section 459E of the Corporations Act 2001 and Form 509H under the Corporations Regulations and non compliance with it is insufficient to support an application to wind up the applicant.

In respect of proceedings BS 12728/21:

5. The creditors statutory demand for payment of a debt dated 13 October 2021 is set aside.

6. The first and second respondents pay the applicants costs on the indemnity basis.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

As to the question of costs, the applicant seeks an order that costs be paid on an indemnity basis. Given the failure of the applicant to seek to set aside the first demand as required under s 459G of the Corporations Act 2001 (Cth) within time, even though the respondents were informed of the deficiencies in the statutory demand by the applicant’s solicitors prior to the application to set aside being made, I am not satisfied that I should order indemnity costs in respect of that application. The respondents did, however, refuse to withdraw the demand despite being informed of its deficiencies by the applicant’s solicitors and invited to withdraw it. An application therefore had to be made. The respondents should therefore pay the applicant’s costs on a standard basis. However, in relation to the second demand dated 13 October 2021 (albeit sent by email on 11 October 2021 which is the date of the affidavit), it would be appropriate to order, in the circumstances, that costs be paid on an indemnity basis by the first and second respondents. The respondents were given a clear opportunity to withdraw,[23] the statutory demand having been placed on notice by the applicant’s solicitors as to its deficiencies and that costs would be sought by the applicant’s solicitor in its letter dated 13 October 2021, a number of those matters having been raised in the context of the first demand on 28 September 2021. Notwithstanding that, Ms Hogben refused to withdraw the demand. I am satisfied that the circumstances warrant an order being made on an indemnity basis. I will therefore order in both cases that the costs be paid on the standard basis.[23]Elliott Harvey Securities Ltd v Raynel & Anor [2015] QSC 212.Conclusion I will make the order in terms of the draft provided by the applicant save in relation to costs for the first demand which the respondents will be ordered to be paid on a standard basis.

Ratio Decidendi

Legal Principle Established

In Sustainable Organics (Wooshaway) Pty Ltd v Ranger and Loaders Pty Ltd,[13] Justice Philippides considered the decision of Re Beralt Pty Ltd amongst other decisions. In that case, the applicant had sought a declaration that the statutory demand was not a statutory demand for the purposes of part 5.4 of the Corporations Act 2001 (Cth) and sought injunctive relief to restrain the party responsible for issuing the statutory demand from relying upon the statutory demand. Her Honour determined that the failure to specify in the statutory demand an address for service within the State was an error which rendered the statutory demand defective but did not have the result that the document which, in its form, purported to be a statutory demand was incapable of satisfying the description of a statutory demand for the purposes of s 459E of the Corporations Act 2001 (Cth). Her Honour did not consider that the applicant had shown the statutory demand was made in circumstances where there had been an abuse of process, nor did the affidavit material depose to some substantial injustice which had resulted from the defect in the statutory demand justifying injunctive relief.[13][2011] QSC 45.Consideration The applicant submits it would be unconscientious for the second respondent to rely on her entitlement to file a winding up application for a number of reasons. No debt The applicant contends that the first demand does not pertain to a debt and that the applicant is not indebted to either of the respondents for the amount described in the first demand or at all. The statutory demand claims a debt of $300,000.00. It is said to be “as prescribed by the said executed mortgage and agreed upon as a non-disputable debt.” The mortgage is a document which purports to be signed by Ms Judy Anne Staker.[14] The borrower is identified as “Cathy Jayne Again Pty Ltd”. The moneys secured include those advanced to the borrower. It is not signed by the applicant. Moreover, there is no provision providing for the proposed advance to be an “undisputable debt”. To the extent the moneys to be advanced are provided for in the loan agreement between the applicant and the first respondent dated 31 August 2021, that provides that the borrower is Cathy Jayne Again Pty Ltd. The second respondent and Ms Stoker are nominated as guarantors in relation to that agreement. According to the terms of the loan agreement, the first respondent was to provide the applicant with, inter alia, a mortgage in registerable form over a property owned by Judy Ann Staker, her mother, and any other document required for registration of the mortgage (as requested by the lender). The applicant was only required to advance the funds if and when the preconditions of the advance were satisfied. The applicant contends that the preconditions were not satisfied[15] on the basis of Ms Judy Staker not engaging in the VOI process. The applicant also contends that the negotiations for the loan came to an end and to the extent there was a binding agreement, it terminated the loan agreement on the 7 September 2021. The applicant’s evidence establishes that there is a genuine dispute as to whether the preconditions required to be fulfilled by the borrower set out in part 5 of the loan agreement were ever satisfied, such that no obligation to advance the monies ever arose. More fundamentally, the evidence does not support there being any debt being due and payable at all. A failure to provide the monies the subject of the loan would not give rise to a debt owing to the borrower and certainly not to the guarantor. At its highest, the only claim for failing to advance the monies in question by the first respondent could be a claim for damages arising from a breach of contract. It is not a claim for debt. A claim for unliquidated damages is incapable of supporting a statutory demand.[16] Where the debt alleged does not exist and the claim the subject of a statutory demand is one for an unliquidated sum, that would provide a proper basis upon which a statutory demand would be set aside.[17] [14]That is challenged by the applicant but it is not a matter which I need to consider further for the purpose of this decision and I will assume it is signed by Ms Staker.[15]Ms Hogben contends otherwise, referring to an email said to be from the applicant’s solicitor. There is evidence to the contrary provided by the applicant.[16]First Line Distribution Pty Ltd v Paul Whiley (1995) 18 ASCR 185 at 18; Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235 at [28] and [29].[17]Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235 at [30] and [31]. Given that a statutory demand includes a purported demand, there is little scope for declaring the demand a nullity.

CITATION:	Elevare Pay Easy Pty Ltd v Cathy Jayne Again Pty Ltd & Anor [2021] QSC 303
PARTIES:	ELEVARE PAY EASY PTY LTD ACN 634 728 591 (applicant) v CATHY JAYNE AGAIN PTY LTD ACN 642 764 903 (first respondent) AND CATHY JAYNE HOGBEN (second respondent)
FILE NO/S:	BS 11451 of 2021 BS 12728 of 2021
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	18 November 2021
DELIVERED AT:	Brisbane
HEARING DATE:	16 November 2021
JUDGE:	Brown J
ORDER:	The order of the Court is that: In respect of proceedings BS 11451/21: 1. The applicant have leave to file the Amended Originating Application dated 15 November 2021. 2. The first and second respondents be restrained from making an application to wind up the applicant based on non-compliance with the Creditors Statutory Demand dated 9 September 2021 (“Demand”). 3. The respondents pay the applicant’s costs on a standard basis. 4. The Demand does not substantially comply with the essential requirements of section 459E of the Corporations Act 2001 and Form 509H under the Corporations Regulations and non compliance with it is insufficient to support an application to wind up the applicant. In respect of proceedings BS 12728/21: 5. The creditors statutory demand for payment of a debt dated 13 October 2021 is set aside. 6. The first and second respondents pay the applicants costs on the indemnity basis.
CATCHWORDS:	CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SUBSTANTIAL INJUSTICE – where the applicant and first respondent entered into a loan agreement – where the applicant treated the loan agreement as being terminated – where the respondents issued the applicant with two statutory demands – where the applicant seeks to set aside the statutory demands Corporations Act 2001 (Cth) ss 459G, 459H, 459E, 459J, 459S Corporations Regulations 2001 (Cth) Service and Execution of Process Act 1992 (Cth) s 16 David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265, cited Elan Copra Trading Pty Ltd v JT International Pty Ltd (2005) 226 ALR 349, considered Elliott Harvey Securities Ltd v Raynel & Anor [2015] QSC 212, cited First Line Distribution Pty Ltd v Paul Whiley (1995) 18 ASCR 185, cited Re Beralt Pty Ltd [2001] 1 Qd R 232, considered Re International Materials v Technologies Pty Ltd (1993) 47 FCR 226, cited Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235, cited SP Hay Pty Ltd v David Gray & Company Pty Ltd (2019) 133 ACSR 504, considered Sustainable Organics (Wooshaway) Pty Ltd v Ranger and Loaders Pty Ltd [2011] QSC 45, considered
COUNSEL:	L Copley for the applicant
SOLICITORS:	McInnes Wilson Lawyers for the applicant